As mentioned above, Lacroa is similar to medieval Europe. Thus the land's nature is relatively undisturbed save for the royal family's castle and the Dark Hole.
The people of Lacroa are humans, Knight Gundams and Mmns. Every so often, Mana Crystals are born and emerge from the Fountain of Spirits. 'All things born' receive their spirits from them, becoming Knight Gundams, humans and even sacred spirits. By the start of the series however, all the humans have been petrified while Zero was the last Knight Gundam remaining.